Outsourcing: Outsourcing: How to Leverage Global ResourcesHow to Leverage Global Resources

Presentation by: Chuck Biehn, CEOPresentation by: Chuck Biehn, CEOAmerican Cutting Edge, Inc. & CB Manufacturing & Sales, Inc.American Cutting Edge, Inc. & CB Manufacturing & Sales, Inc.

Who We AreWho We AreWe are a group of manufacturing and distributing companies whose main focus is cutting instruments for the B2B markets:

–CB Mfg & Sales Company, Inc. – Manufactures and distributes machine knives–American Cutting Edge, Inc. – Distributes industrial razor blades–Better Tools LLC – Distributes branded tools for the flooring, roofing and hardware markets–Certified Tool & Grinding Corp. – Manufactures and distributes round cutting tools–Certified Industrial Services – Heat Treating, Surface Grinding and Wire EDM–Evolution Resources LLC – Sources products overseas for USA companies

Why OutsourceWhy Outsource•Outsourcing can save you money

•Outsourcing can helpaccommodate peak loads

Is there a moral issue Is there a moral issue regarding outsourcing?regarding outsourcing?

•Outsourcing can help developyour internal staff

What To OutsourceWhat To Outsource

•Business Process Outsourcing (BPO) •Leverage Off-shore technology and resources

to run enterprise applications such as:•Call Centers

•Human Resources•Payroll

•Tangible Goods

•Items you can market but have no ability to manufacture

•Components Currently Made In-house

•Low – to – Medium Quality

•High Labor Content

Can Asian Sources Be Trusted?Can Asian Sources Be Trusted?

•Overall (but not always) the Asians can be trusted

••Intellectual Property (IP) Intellectual Property (IP) •Some Ways to Protect Your IP

•Order Parts or Semi-finished Products

•Arbitration (not Litigation) Agreements

•Agreements and Contracts

Paying Asian SourcesPaying Asian Sources

•Letter Of Credit

•Standby Line of Credit

•Wire Transfer

•Open Account

Finding Asian SuppliersFinding Asian Suppliers

•Visit the factory

•State-run vs. Private

•Make sure you are dealing with the RIGHT factory!

•Language Barrier

•India – The Leader in BPO•www.sourcingmag.com

•www.alibaba.com www.kellysearch.com •www.chinasources.com www.globalsources.com •www.made-in-china.com

•May not speak English well, but should be able to read it

•Factories are really NOT that hard to find

Negotiating With Asian SuppliersNegotiating With Asian Suppliers

•Offer a Target Price

•Allow them to make a profit

•First Price is not always the Best Price •Chinese Love Quantity

•Smaller Profit Margins

•Lack of experience with Capitalism

What About Customs & Shipping?What About Customs & Shipping?

•There WILLWILL be Issues

•Get Bids

•A Good Shipping Agent Is Essential

What About Quality?What About Quality?

•Be Patient•Detailed Purchase Orders

•Harmonized Tariff Schedule

•Send Samples and Measuring Tools

•Get Samples and Inspection Reports

CommunicationsCommunications

They want to work “The American Way”

No. Problem.

In Writing

Cultural DifferencesCultural Differences

Personal Visits

Guanxi – Relationship or ConnectionsMian-zi – Saving FaceIndirect “NO”

Below:German CNC Saw Blade Sharpening Machine

Above: German PCD Grinding Machine

A lot of buildings going up in China!

Saw Blade TCT Brazing

Note: One man,three machines,like in the USA!

Believe it or not, this is a brand new Manual

Milling Machine in India. With their low

cost of labor they cannot always justify

automatic CNC equipment.

Some factories may have old equipment but can still offer you the quality you need!

OSHA would have a field day here!

They sometimes use labor to inspect quality “into” the product.

This is a “Tea Shop” outside my friend’s factory in India.

The view from the front door of another Indian factory.

A mixture of modern technology with

Ox-Driven Carts!

Chinese love real estate!

More Saw Blade Manufacturing

Japanese Made Heat

Treating Equipment

Outsourcing can be a very valuable strategy Outsourcing can be a very valuable strategy with the potential to increase profitability with the potential to increase profitability and even ensure your company’s survival.and even ensure your company’s survival.

Canton Commodities Exposition

Thank you for your timeThank you for your time